Know The Law: Much Ado of the SLA

On April 8th, Chairman Rosen and the SLA hosted a meeting of wholesalers and retailers. The event took place in the full board room of the Authority’s Lenox Avenue office with video links to Albany and Buffalo. It was also webcast.

Chairman Rosen began the meeting by explaining that he had attended a meeting of The Retailers Alliance at which he had been asked a series of questions, the answers to which were based upon wholesaler policies and procedures rather than state law. In turn, the Chairman decided to bring the industry together to discuss these issues in an open forum.

The Chairman asked the representatives of the wholesalers to explain their policies with regard to returns due to breakage and claims of unsalable. After the wholesalers, who were present, each gave a short summary, retailers explained the types of problems they experience. For example, when they discover a broken bottle months after delivery, or when a consumer returns a bottle of wine and claims that it was corked.

The Chairman asked wholesalers to post their policies on their websites and to include them in appropriate written documents. Chairman Rosen also asked wholesalers and suppliers to discuss this issue to consider whether it was practical to arrive at an industry norm.

The retailers complained about the charges for Bill and Hold. Chairman Rosen explained that it is illegal for a wholesaler to provide free or discounted storage. Under New York’s gift and service rules, the wholesaler is required to charge the retailer fair market prices for any storage services provided.

The retailers would like to be able to pay with credit cards. The anticipation is that the wholesaler would pass the cost of the credit card back to the retailer. The Chairman appointed a committee under the direction of General Counsel Jacqueline Flug to review the issue.

Allocation Situation

Chairman Rosen brought up the issues of the allocation of wines and spirits which are in limited availability. As a general rule, New York law does not permit discrimination among retailers. When goods are limited in availability, wholesalers are permitted to allocate. They must use a method which is fair and reasonable. Historical sales is a reasonable method, provided that some goods are set aside for new customers and that prior conduct was not illegal. The Chairman stated that under the correct circumstances, a wholesaler can allocate more goods to one distribution channel than the other, e.g., 70% of the available goods to on-premise licensees and 30% to off. However, there should never be improper discrimination within a channel. Each wholesaler must notify the wholesale bureau of its method of allocation for each allocated product and must be prepared to defend that method.

Where there is an application for a license under sections 64 (On premise Liquor license) and sections 64-a (Special license to sell liquor for on premise consumption), 64-b (Bottle club license), 64-c (restaurant-brewer license) and 64-d (Caberet license) and three or more premises licensed under one or more of the named sections already exist within 500 feet, the SLA must hold a hearing on notice to the municipality or community board to determine if issuing such a license is in the public interest, convenience and advantage.

The authority may consider any or all of the following in determining whether to grant licenses and permits for the sale of alcoholic beverages at a particular unlicensed location:

(a) The number, classes and character of licenses in proximity to the location.(b) Evidence that all necessary licenses and permits have been obtained.(c) Effect of the grant of the license on vehicular traffic and parking.(d) The existing noise level at the location and any increase that would be generated by the proposed premises.(e) The history of liquor violations and reported criminal activity at the proposed premises.(f) Any other factors relevant to determine the public convenience and advantage and public interest of the community.

At a meeting of the full board held on March 12th, 2013, the Chairman advised all attorneys and applicants that in all 500-foot hearing matters, the Authority requires a written submission to the Administrative Law Judge explaining how the application meets all of the statutory criteria. While appearance at the hearing is optional, the written statement is mandatory. Moreover, the Chairman warned that pro-forma statements will not be sufficient. Each submission should be addressed to the facts and circumstances of the application.

(g) Notwithstanding the provisions of paragraph (b) of this subdivision, the authority may issue a license pursuant to this section for a premises which shall be within 500 feet of three or more existing premises licensed and operating pursuant to this section and sections 64-a, 64-b, 64-c, and/or 64d of this article if, after consultation with the municipality or community board, it determines that granting such license would be in the public interest.

The authority may issue a license if, after consultation with the municipality or community board, it determines that granting such license would be in the public interest. Before it may issue any such license, the authority shall conduct a hearing, upon notice to the applicant and the municipality or community board, and shall state and file in its office its reasons therefore. Notice to the municipality or community board shall mean written notice mailed by the authority to such municipality or community board at least 15 days in advance of any hearing scheduled pursuant to this paragraph. Upon the request of the authority, any municipality or community board may waive the fifteen day notice requirement. No premises having been granted a license pursuant to this section shall be denied a renewal of such license upon the grounds that such premises are within 500 feet of a building or buildings wherein three or more premises are licensed and operating pursuant to this section and sections 64-a, 64-b, 64-c, and/or 64-d of this article.

One-Stop Shop Up & Running

New York’s alcoholic beverage producers now have a single point of government contact which may be used for assistance with regulations, licensing, state incentives and related issues. The “one-stop shop” is an outgrowth of Governor Cuomo’s Wine, Beer and Spirits Summit held in October 2012. Each agency with jurisdiction over a portion of the industry has been directed to designate staff members who will coordinate and respond to inquiries, host educational programs and help resolve problems.

The one-stop shop website can be found at http://esd.ny.gov/NYSBeverageBiz/permitsIncentives.html. It contains links to details about the summit, permits and incentives, frequently asked questions, tourism resources and contact information. It also contains links to other New York State web pages such as Empire State Development.